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News Release


Release No: 332-02
June 27, 2002


Under Secretary of Defense (Comptroller) and Chief Financial Officer Dov S. Zakheim today announced the results of a task force review into use and management of government charge cards by the Department of Defense.

In March 2002, Secretary of Defense Donald H. Rumsfeld directed Zakheim to review the charge card programs following reports of charge card misuse within the department and to recommend changes to improve DoD charge card performance.

Key task force recommendations include holding DoD accountable officials liable for misuse of purchase cards through new financial measures; pursuing alternative channels for prosecuting fraud; and deploying new data mining technology to automatically detect suspicious transactions.

Many of the recommendations focus on tightening management of DoD charge card programs. DoD will also strengthen internal controls and training, reduce the number of travel cardholders, limit the number of purchase card accounts within the scope of each responsible reviewing official, and reinforce the range of sanctions available to commanders and supervisors for those who misuse or abuse the charge cards.

Zakheim and Under Secretary of Defense (Acquisition, Technology & Logistics) E.C. "Pete" Aldridge will oversee implementation of the recommendations, many of which will be done on an expedited basis.

In highlighting the findings of the task force, Zakheim stressed that the vast majority of DoD personnel manage government credit cards appropriately. "The recommendations being announced today will greatly reduce the likelihood of any misuse, but the department's work is not over. We must continue to pay attention to charge card management after this initial round of changes is implemented," he explained.

DoD uses two major charge card programs, which help save millions of dollars in administrative expenses: purchase cards to buy certain goods and services directly from private sector vendors, and travel cards to pay expenses of DoD personnel during official travel.

Purchase cards allow DoD to save an estimated $20 per transaction compared to the previous system of tedious processing of purchase requests. Savings over the past eight years exceed $900 million. In fiscal 2001, the department had 207,025 purchase card accounts totaling $6.1 billion in DoD spending. This extensive, decentralized use of purchase cards facilitates the efficient procurement of goods and services, but it also requires reliable controls to prevent misuse.

The travel card virtually eliminates costly processing of advanced travel payments to DoD personnel. DoD, its civilian employees, and its military members have a combined total of more than 1.4 million travel card accounts and made $3.4 billion in charges in fiscal 2001. Problems in the travel program targeted for correction include improper purchases and late payment of charges.

Details of the task force recommendations are in the "Task Force on DoD Charge Card Programs Final Report." The task force included representatives from major DoD organizations and was assisted by the Office of Management and Budget, Office of Personnel Management, the Department of Justice and the General Services Administration. A copy of the report is available on the Web at http://www.dod.mil/comptroller/financialindex.html. A synopsis of key recommended actions is below.

Management Emphasis

  • Hold DoD senior leadership responsible for preventing misuse of government charge cards.
  • Implement metrics to assess progress in improving charge card programs.
  • When charge card abuse is credibly alleged, notify the cardholder's supervisor and security manager and require them to determine whether the allegation affects the cardholder's security clearance.


  • Issue new directives specifying responsibilities and policies governing charge cards.
  • Issue new guidance to ensure that charge card accounts are cancelled when cardholders leave a DoD organization.


  • Deploy data mining technology to detect suspicious transactions.

Purchase Card Actions

  • Seek new authority to hold DoD accountable officials (including purchase cardholders) pecuniarily liable for illegal, improper, or incorrect purchases (legislation was submitted and is pending Congressional action).
  • Identify and use additional means to pursue and prosecute fraud.
  • Issue full concept of operations to describe requirements for purchase card programs.
  • Accelerate electronic billing and certification systems.
  • Develop and implement new training materials and courses on purchase cards.
  • Establish skills and recommended grade level for a purchase card Agency Program Coordinator (APC).

Travel Card Actions

  • Reduce the number of DoD travel cards by canceling expired and inactive cards.
  • Create an exemption to mandatory use of the travel card for certain deployments to locations where it would be difficult for the traveler to ensure a timely reimbursement.
  • Evaluate travel card alternatives, such as debit and stored value cards, that may serve some DoD travelers as well, but with less risk of problems.
  • Identify improvements in travel process to speed up reimbursements.

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